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Allen Corporation acquired 5-year property costing $150,000 on September 10, 2018. This is the only property...

Allen Corporation acquired 5-year property costing $150,000 on September 10, 2018. This is the only property acquired this year, and Allen elects to expense the maximum amount under Section 179. Allen’s income before deducting depreciation is $15,000. What is the maximum amount that Allen can deduct in 2018 for Section 179 expensing?

Question 3 options:

1)

$10,000

2)

$15,000

3)

$25,000

4)

$150,000
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Answer #1

The maximum amount that Allen can deduct in 2018 for section 179 expensing =

Though the maximum limit allowable for deduction under section 179 is $1000000 in year 2018. According to this, Allen should get deduction of $150000, that is the cost of the property. But the deduction is subject to the Income. In the given question, Allen's Income before depreciation is $15000. Therefore, allowable deduction under section 179 would be limited to $15000.

Therefore, the correct answer is option (2), $15000.

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